Hospital provider fee becoming a campaign issue in Colorado

Corey Hutchins

CENTENNIAL, CO — Larry Crowder, a Republican senator representing a rural district in southeastern Colorado, is running simultaneously for re-election and straight into the year’s biggest political buzz saw.

Since the start of the legislative session in January, a debate over whether to reclassify a billion-dollar hospital program in order to keep more state revenues in the budget has become the most pressing issue at the Capitol.

On Wednesday, that debate spread from the Statehouse to the suburbs when Crowder and House Republican Minority Leader Brian DelGrosso addressed a business roundtable at the South Metro Chamber of Commerce. The two debated opposing sides, with Crowder saying lawmakers should look at reclassifying the hospital provider fee into an enterprise, and DelGrosso saying it should stay where it is, even if money generated from it pushes general fund revenues over limits set by the Taxpayer’s Bill of Rights (TABOR) and triggers tax refunds. In Colorado, money generated by an enterprise doesn’t contribute to the revenue subject to TABOR spending caps, so reclassifying the hospital program into an enterprise would mean Colorado wouldn’t hit its spending limits under TABOR. As it stands, money from the provider fee pushes revenues over the TABOR limits, triggering taxpayer refunds.

As Crowder indicated, the debate over the issue is one that stretches from where he spoke at the Whipplewood Conference Center in a suburban shopping plaza all the way back to his rural district as he campaigns for another term in the state Senate.

“You’ve got to realize I’m up for re-election,” the mustachioed farmer from Alamosa told the roughly 40 men and women in business suits seated around him. “Why should I be out there with myself exposing myself on an issue like this on re-election? Well, this issue is bigger than me. This is something that the future of healthcare in Colorado needs to look at and look at very hard.”

Related: What you need to know about Colorado’s biggest political battle. It’s called the hospital provider fee, and it’s complicated. Let’s break it down.

Crowder, who was the only Republican in Colorado to vote for Medicaid expansion, had earlier this session seemed on the fence about what has become Democratic Gov. John Hickenlooper’s strategic plan to free up more money in the state budget to pay for vital services. But the senator had concerns about a nonbinding legal memo from legislative lawyers that said reclassifying the hospital program into an enterprise would be unconstitutional.

These days, Crowder told business leaders at the the South Metro Chamber roundtable, he’s less concerned about that particular aspect.

Last week, two former general counsels for two ex-Colorado governors, Republican Bill Owens and Democrat Bill Ritter respectively, released a legal review saying the plan is constitutional. Crowder pointed out that, sure, whoever paid for such a legal review might be able to find a couple high-profile lawyers to opine in their favor, and Crowder said he didn’t personally know the two attorneys involved.

“But the reality is I do know John Suthers,” Crowder said. “And John Suthers, who used to be the attorney general here and the U.S. attorney, has come out in favor — well, not in favor— but he was saying that it’s constitutional. There is a question there of constitutionality on this issue. And knowing John Suthers like I do and like I’m sure as a lot of you do, you know that he cannot be bought on his opinion. That’s as simple as that.”

When the legal review came out last week, Suthers had added his voice to a news release on the topic.

Related: Lawyers for two ex-governors say Hickenlooper hospital plan is legal

At the Capitol, Republican Senate Leader Bill Cadman of Colorado Springs has said the reclassification plan is a nonstarter. He and many other Republicans want to see more money refunded to individual taxpayers, not reclassified in a way that it can stay inside state government. Hickenlooper and many Democrats want the program reclassified. Republicans control the Senate in Colorado while Democrats control the House.

At the roundtable Wednesday morning, Crowder called the reclassification plan a minor solution to the state’s budget woes, but one that deserves a good look.

He talked about how the fee benefits his district’s rural hospitals, and framed the program as a boon to rural Colorado. He rattled off a list of other enterprises that already exist, from the state lottery and the State Fair Authority to student loan programs and state nursing homes. He called the issue one that affects the poor and middle class.

“The question for me is constitutionality, because I cannot vote against the Constitution,” Crowder said. “But the reality is only judicial can determine whether it’s unconstitutional. But there’s enough evidence out there to indicate to me that it’s constitutional. And with the other entities in the state that’s put in the enterprise fund, it indicates to me that this should be kind of a priority.”

On the other side of the debate was DelGrosso of Larimer County. He had a concern: If the hospital program is reclassified and not subject to TABOR limitation, would the state have to recalculate the TABOR formula? And if that happened, he said, reclassifying the hospital program would only be a “rock in the river” instead of a $350 million windfall for state government that proponents for the plan expect.

“If we pull it out and make it an enterprise, does the state have to reset its overall spending caps?” he asked. “That is another one of the arguments that we go through.”

Henry Sobanet, the budget director for the governor’s office, says this was an issue that came up last year when an unsuccessful bill to reclassify the program emerged late in the session, and that bill was written in a way that wouldn’t affect TABOR calculations. It’s likely if legislation comes up this year to re-designate the hospital provider fee it would use similar language.

DelGrosso, who is not up for re-election, said the people in his district would rather see tax refunds, anyway. “The people in my district aren’t going to be very happy with me,” he said if he were to vote to put their refunds back into state government.

Any money freed up through a reclassification effort, DelGrosso said, would be minimal and won’t be able to shore up transportation and education funding. The budget, he said, has grown $3.5 billion since he’s been in the legislature.

“The reality is we’ve spent that three-and-a-half billion dollars in other areas and not made some of these investments that people keep talking about: higher ed, K-12 education,” he said. “I feel that there has been money to [invest] in those other areas.”

Following the discussion, some in the room were split on the two presentations.

Phil Cernanec, a city councilman in Littleton and a candidate for the Arapahoe County Commission, said he felt debate over the hospital provider fee is a smokescreen. He’d rather see the question taken out of the hands of lawmakers and put to voters in a ballot initiative. Coloradans, he said, will vote for tax increases or extending taxes when they know exactly where the money will go. With the hospital provider fee situation, it’s not so specific.

“If they try to do it without taking it to the vote of the people, somewhere along the line I think they are going to further fracture the trust level with government,” he said.

David Schlatter, a commercial real estate advisor, said it’s all pretty simple: “If you want the money, go ask the voters,” he said. “Why not ask? It’s intuitive, and it’s bothersome to run from that and try to figure out little ways, workarounds.”

For chamber member Robert Bowen, Crowder’s position was the more attractive one. As a former Democratic lawmaker representing Denver in the 1980s, he lost a primary election by sticking his neck out on an issue. So he was impressed that Crowder would take such a public position in an election year.

“It takes a lot of courage to do,” he said. “I honor people who crossover … fight their own party to do what they think they need to do.”

Trevor Roth, a millennial who moved to Colorado four years ago and works for Hospice Care of the Rockies, said he came to the roundtable to try and get a better sense of the hospital provider fee issue and how it affects his industry. He’s interested in seeing more creative proposals, he said, like something that could reduce emergency room visitation and the financial stress on Medicaid instead of just whether to raise or lower taxes.

And, like many Coloradans who have lived here much longer than he has, he expressed confusion about a major part of the debate.

“If I’m honest with you, I’m from Pennsylvania,” he said. “I haven’t really heard of TABOR that much. I was here as more of a learning experience.”